Event Based Option Trading

kiranjakka

kiranjakka

Well-Known Member
#1
#1
HI,

I have noticed in Traderji forum that there are no threads based on events even thought events play an very important role in taking a position for options traders.

Though there are some discussions going on based on events they are generalized and not localized.

As a trader you know that events play an important role in building up a position on a particular stock or index which influence the stock positively or negatively it is very essential for a trader to position him self a head of event.

Events may be of many factors: the most common being Quarterly results all of you what happened to the stocks like Infy,Hindunilvr,Bharti etc recently,and generalized factors being the economic factors localized(like indian policy actions) and generalized (Fed meetings, QE3 etc) and crude currencies etc.

In this thread we try to share some information based on events and position ourselves for profit making

Imagine you having a short position in bharti or infy or long positions in reliance or hindunilvr etc which a layman can even guess whats going to happen to these stocks after results.

Though i may not be able to post my views regularly here i will try to keep this thread as far as possible

Caution: Options trading based on events can extremely affect your trading account if you are not properly positioned by hedging or you have a naked position and the event turns against you.

Thank You,

:thumb:
 
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kiranjakka

kiranjakka

Well-Known Member
#3
#3


India VIX is at nearly year low, the recent low was formed on 30-4-2012 the value near 16.99, when we compare that with nifty index market took a straight dip from 5300 till 4779 in a matter of few days.

so the point is we made a new low may be yearly of 15.64, with global markets being aggressive making new highs every day, and news coming out of the markets being very bad we can take a position based on VIX by buying the call and put of the same strike say 5400 tomorrow around an average price of 55rs so our total investment will come around 55*2=110pts say 5500rs and wait for things to happen we expect a break down or break out of this level and so benifit from the moves

caution:We may loose our trade if we continue to trade low on VIX may be it can happen for more than 30days too and may trade in very narrow range ,the values may not be exactly correct but i took near by values

thank you
 
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DanPickUp

DanPickUp

Well-Known Member
#4
#4
Dear Kiranjakka

Good idea to start a thread with that subject. :clapping: Appreciate it. :)

Coming straight to the point: You trade in Indian markets. I guess the readers here would appreciate some more words from your side about what kind of hedged strategies make sense in your home market to trade those events. You mentioned a straddle. Are there other strategies you would recommend to implement for event trading or is the straddle in your opinion the most easy and best way to catch up the coming moves after news are out?

Good trading

DanPickUp
 
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kiranjakka

kiranjakka

Well-Known Member
#5
#5
kiranjakka said:


India VIX is at nearly year low, the recent low was formed on 30-4-2012 the value near 16.99, when we compare that with nifty index market took a straight dip from 5300 till 4779 in a matter of few days.

so the point is we made a new low may be yearly of 15.64, with global markets being aggressive making new highs every day, and news coming out of the markets being very bad we can take a position based on VIX by buying the call and put of the same strike say 5400 tomorrow around an average price of 55rs so our total investment will come around 55*2=110pts say 5500rs and wait for things to happen we expect a break down or break out of this level and so benifit from the moves

caution:We may loose our trade if we continue to trade low on VIX may be it can happen for more than 30days too and may trade in very narrow range ,the values may not be exactly correct but i took near by values

thank you
Click to expand...
Bought nifty 5400 ce at 57 and nifty 5400 pe for 53 total cost is 110pts that is 5500rs lets see;;;;;;;;;
 
P

psvaja

Active Member
#6
#6
Because VIX is trading near lowest point, I think initiating calendar spread either at ATM (5400 CE & 5400 PE) or both side one strike away from ATM (5300 PE & 5500CE) is better idea than having simple stradle. If VIX continue to low & if market does not move either side, you start loosing faster in stradle. Of course, in case of calendar spreads, more margin will be required as well as you should have adjustment points and plan ready in case of market moves towards breakeven points. The best way is to use options oracle to analyze breakeven points & than decides what adustment can be done.

Pravin
 
kiranjakka

kiranjakka

Well-Known Member
#7
#7
psvaja said:
Because VIX is trading near lowest point, I think initiating calendar spread either at ATM (5400 CE & 5400 PE) or both side one strike away from ATM (5300 PE & 5500CE) is better idea than having simple stradle. If VIX continue to low & if market does not move either side, you start loosing faster in stradle. Of course, in case of calendar spreads, more margin will be required as well as you should have adjustment points and plan ready in case of market moves towards breakeven points. The best way is to use options oracle to analyze breakeven points & than decides what adustment can be done.

Pravin
Click to expand...
THIS POSITION WAS TAKEN IN EXPECTATION THAT NIFTY WILL BREAK OUT ON EITHER SIDE;:thumb:
 
kiranjakka

kiranjakka

Well-Known Member
#8
#8
DanPickUp said:
Dear Kiranjakka

Good idea to start a thread with that subject. :clapping: Appreciate it. :)

Coming straight to the point: You trade in Indian markets. I guess the readers here would appreciate some more words from your side about what kind of hedged strategies make sense in your home market to trade those events. You mentioned a straddle. Are there other strategies you would recommend to implement for event trading or is the straddle in your opinion the most easy and best way to catch up the coming moves after news are out?

Good trading

DanPickUp
Click to expand...
i am only looking up for long straddle on this thread or in fact even buy naked options if i am too confident about my positions. and by the way ham dhono bhai bahi, mai ladaki nahi hu ladaka hu. who picture accha laga muje tho who apna avatar bana liya, :)
 
kiranjakka

kiranjakka

Well-Known Member
#9
#9
psvaja said:
Because VIX is trading near lowest point, I think initiating calendar spread either at ATM (5400 CE & 5400 PE) or both side one strike away from ATM (5300 PE & 5500CE) is better idea than having simple stradle. If VIX continue to low & if market does not move either side, you start loosing faster in stradle. Of course, in case of calendar spreads, more margin will be required as well as you should have adjustment points and plan ready in case of market moves towards breakeven points. The best way is to use options oracle to analyze breakeven points & than decides what adustment can be done.

Pravin
Click to expand...
hi got your point but dont you think that calendar spreads are very risky if IV increases and we are out of the tight range 5350-5400
 
DanPickUp

DanPickUp

Well-Known Member
#10
#10
kiranjakka said:
i am only looking up for long straddle on this thread or in fact even buy naked options if i am too confident about my positions. and by the way ham dhono bhai bahi, mai ladaki nahi hu ladaka hu. who picture accha laga muje tho who apna avatar bana liya, :)
Click to expand...
What doe's it mean in English? :)
 
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